About Playing with Comdolls

Welcome to my blog! I am HappyPip, lady trader of the Commodity Dollars or "ComDolls!" We will look at price action of the Australian Dollar, New Zealand Dollar, and the Canadian Dollar, as well as their respective economies, and how commodities prices may affect their long term movements. Put on a "happy face" and come join me, won't ya! :)

AUD/JPY: Double Bottom Breakout – Booked Profits!

As I mentioned in my Twitter update yesterday, I wanted to reduce my risk ahead of the FOMC statement so I just decided to lock in whatever profits I had at that time. I thought that price action could go either way depending on what the Fed would say (Hey, that rhymes!) so I played it safe for now.

I was able to close the remaining half of my position at 92.50 during the London session and, while I feel bad for not being gutsy enough to hold on, I’m also happy with how I managed my open trade and caught a pretty decent win.

P/L: +225 pips / +0.75%

All in all, that was a 1.5:1 return-on-risk with my 0.5% account risk. Not bad, right?

Now that the FOMC statement has played out and it seems that risk appetite is still on, I’m still considering re-entering this long position, possibly on the break of the previous highs around 93.50. Do you think that’s a good idea or should I move on to another pair instead?

Trade Update: 2013-09-09 1:43

Yipes! Those Australian jobs figures aren’t lookin’ too good for my long AUD/JPY setup! Here are some adjustments I made on my trade:

As I mentioned in my trade plan, I was eyeing the 93.00 major psychological resistance as one of my profit target levels. I was able to lock in some pips by closing half my position at this level, sealing in a 0.42% gain.

I left the remaining half still open, thinking that the Australian jobs release might boost the pair higher, but I also adjusted my stop higher (91.50) to protect some of the profits on that position.

AUD/JPY sold off sharply during the Asian session but appears to be finding support near 92.00. If Forex Gump is spot on with his analysis of past price action on Australian jobs data, AUD/JPY might have a chance at resuming its climb later on today.

In case I get stopped out at 91.50, I’d still wind up with a 0.59% gain (0.42% on the first half and 0.17% on the remaining half) on this long trade. Still crossing my fingers that this pair bounces back up though!

Trade Update: 2013-09-09 1:43

Another upside breakout for AUD/JPY! After breaking above the double bottom neckline last week, AUD/JPY gapped up over the weekend and broke above the bullish pennant. I guess that means it’s time for me to move my stop to entry for a risk-free trade!

Over the weekend, the Australian elections resulted in a victory for Tony Abbott, who promised to repeal the carbon and mining tax. This spells positive prospects for the Australian economy, which recently suffered a setback when former PM Rudd’s mining tax led to a downturn in mining investment.

Upbeat reports from China this week could also sustain the pair’s rally, as the world’s second largest economy is set to print its retail sales and industrial production figures. Meanwhile, Abe’s proposed sales tax increase is currently weighing on the Japanese yen as the BOJ has expressed its willingness to add stimulus if necessary.

Right now, I’m looking at a risk-free trade setup in case AUD/JPY should suddenly sell off. I’m still aiming for the 93.00 mark, which is just 150 pips away from the current price.

Do you think it’ll reach my target this week? I’d love to get your feedback on this!

Let’s start with the technicals. I’m seeing a double bottom pattern on the pair’s daily chart, and it appears that AUD/JPY has just broken above the neckline around 90.00. On top of that, the bullish divergence that I noted in my previous AUD/JPY trade update is just starting to come into play.

As for fundamentals, Aussie bears started retreating earlier this week when China printed improvements in its manufacturing PMIs for August. Aside from that, the RBA‘s decision to keep rates unchanged and remove the phrase “scope for further easing” in its monetary policy statement led most traders to believe that the central bank won’t be cutting rates for the rest of the year.

Earlier today, the Australian GDP release showed a 0.6% growth figure, which is in line with market expectations. This was enough to trigger a strong upside break for AUD/JPY and I jumped in the move by going long at market (90.50).

The double bottom pattern is roughly 250 pips in height so I will be aiming for the same amount, right until AUD/JPY reaches that next resistance area around 93.00. I set my stop at 150 pips below entry, half of AUD/JPY’s average weekly range.

Here are the details:

Long AUD/JPY at 90.50, stop loss at 89.00, profit target at 93.00. I risked 0.5% of my account on this trade and if you’re thinking of joining me, you should read our risk disclosure first!